(SISMONDI and OUR NATIVE SISMONDISTS)

VII

Crises

Sismondi’sthird mistaken conclusion, drawn from the wrong theory
which he borrowed from Adam Smith, is the theory of crises.
Sismondi’s view that accumulation (the growth of production in
general) is determined by consumption, and his incorrect explanation of
the realisation of the aggregate social product (which he reduces to the
workers’ share and the capitalists’ share of revenue)
naturally and inevitably led to the doctrine that crises are to be
explained by the discrepancy between production and consumption. Sismondi
fully agreed with this theory. It was also adopted by Rodbertus, who
formulated it somewhat differently: he explained crises by saying that
with the growth of production the workers’ share of the product
diminishes, and wrongly divided the aggregate social product, as Adam
Smith did, into wages and “rent” (according to his terminology
“rent” is surplus-value,
i.e., profit and ground-rent together). The scientific analysis of
accumulation in capitalist
society[1]
and of the realisation of the product
undermined the whole basis of this theory, and also indicated that it is
precisely in the periods which precede crises that the workers’
consumption rises, that underconsumption (to which crises are allegedly
due) existed under the most diverse economic systems, whereas crises are
the distinguishing feature of only one system—the capitalist system.
This theory explains crises by another contradiction, namely, the
contradiction between the social character of production (socialised by
capitalism) and the private, individual mode of appropriation. The
profound difference between these theories would seem to be self-evident,
but we must deal with it in greater detail because it is the Russian
followers of Sismondi who try to obliterate this difference and
to confuse the issue. The two theories of which we are speaking give
totally different explanations of crises. The first theory explains crises
by the contradiction between production and consumption by the working
class; the second explains them by the contradiction between the social
character of production and the private character of
appropriation. Consequently, the former sees the root of the phenomenon
outside of production (hence, for example, Sismondi’s
general attacks on the classical economists for ignoring consumption and
occupying themselves only with production); the latter sees it precisely
in the conditions of production. To put it more briefly, the former
explains crises, by underconsumption (Unterkonsumption ), the
latter by the anarchy of production. Thus, while both theories explain
crises by a contradiction in the economic system itself, they
differ entirely on the nature of the contradiction, But the question is:
does the second theory deny the fact of a contradiction between production
and consumption,
does it deny the fact of underconsumption? Of course not. It
fully recognises this fact, but puts it in its proper, subordinate, place
as a fact that only relates to one department of the whole of capitalist
production. It teaches us that this fact cannot explain crises, which are
called forth by another and more profound contradiction that is
fundamental in the present economic system, namely, the contradiction
between the social character of production and the private character of
appropriation. What, then, should be said of those who, while they adhere
essentially to the first theory, cover this up with references to the
point that the representatives of the second theory note the existence of
a contradiction between production and consumption? Obviously, these
people have not pondered over the essence of the difference
between the two theories, and do not properly understand the second
theory. Among these people is, for example, Mr. N.-on (not to speak of
Mr. V. V.). That they are followers of Sismondi has already been indicated
in our literature by Mr. Tugan-Baranovsky (Industrial Crises,
p. 477, with the strange reservation relative to Mr. N.-on:
“evidently”). But in talking about “the shrinking of the home
market” and “the decline in the people’s consuming
capacity” (the central points of his views), Mr. N.-on,
nevertheless, refers to the representatives of the second theory who
note the fact of the contradiction between production and
consumption, the fact of underconsumption. It goes without saying that
such references merely reveal the ability, characteristic in general of
this author, to cite inappropriate quotations and nothing more. For
example, all readers who are familiar with his Sketches will, of
course, remember his “citation” of the passage where it says
that “the labourers as buyers of commodities are important for the
market. But as sellers of their own
commodity—labour-power—capitalist society tends to keep them
down to the minimum price” (Sketches, p. 178), and they
will also remember that Mr. N.-on wanted to deduce from this both
“the shrinkage of the home market” (ibid., p. 203
et. al.) and crises (p. 298 et. al.).
But while quoting this passage (which, as we have explained, proves
nothing), our author, moreover, leaves out the end of the
footnote from which his quotation was
taken. This quotation was from a note inserted in the manuscript
of Part II of Volume II of Capital. It was inserted “for
future amplification” and the publisher of the manuscript put it in
as a footnote. After the words quoted above, the note goes on to say:
“However, this pertains to the next
part,”[2]
i.e., to the third
part. What is this third part? It is precisely the part which contains a
criticism of Adam Smith’s theory of two parts of the aggregate
social product (together with the above-quoted opinion about Sismondi),
and an analysis of “the reproduction and circulation of the
aggregate social capital,” i.e., of the realisation of the
product. Thus, in confirmation of his views, which are a repetition of
Sismondi’s, our author quotes a note that pertains “to the
part” which refutes Sismondi: “to the part” in which it
is shown that the capitalists can realise surplus-value, and that
to introduce foreign trade in an analysis of realisation is absurd....

Anotherattempt to obliterate the difference between the two theories and
to defend the old romanticist nonsense by referring to modern theories is
contained in Ephrucy’s article. Citing Sismondi’s theory of
crises, Ephrucy shows that it is wrong (Russkoye Bogatstvo,
No. 7, p. 162); but he does so in an extremely hazy and contradictory
way. On the one hand, he repeats the arguments of the opposite theory and
says that national demand is not limited to articles of direct
consumption. On the other hand, he asserts that Sismondi’s
explanation of crises “points to only one of the many circumstances
which hinder the distribution of the national product in conformity with
the demand of the population and with its purchasing power.” Thus,
the reader is invited to think that the explanation of crises is to be
found in “distribution,” and that Sismondi’s mistake was
only that he did not give a full list of the causes which hinder this
distribution! But this is not the main thing . “Sismondi,”
says Ephrucy, “did not confine himself to the above-mentioned
explanation. Already in the first edition of Nouveaux Principes
we find a highly enlightening chapter entitled ‘De la connaissance
du
marché.’[3]
In this chapter Sismondi reveals to us the main causes that disturb the
balance between production and consumption” (note this!) “with
a clarity that we find among only a few economists”
(ibid.). And quoting the passages which say that the manufacturer
cannot know the market, Ephrucy says: “Engels says almost the same
thing” (p. 163), and follows this up with a quotation saying that
the manufacturer cannot know the demand. Then, quoting some more passages
about “other obstacles to the establishment of a balance between
production and consumption” (p. 164), Ephrucy assures us that
“these give us the very explanation of crises which is becoming
increasingly predominant”! Nay, more: Ephrucy is of the opinion that
“on the question of the causes of crises in the national economy, we
have every right to regard Sismondi as the founder of the views which were
subsequently developed more consistently and more clearly”
(p. 168).

Butby all this Ephrucy betrays a complete failure to understand the
issue! What are crises? Overproduction, the production of commodities
which cannot be realised, for which there is no demand. If there is no
demand for commodities, it shows that when the manufacturer produced them
he did not know the demand. The question now arises: is this indication of
the condition which makes crises possible an explanation of the crises?
Did Ephrucy really not understand the difference between stating the
possibility of a phenomenon and explaining its inevitability? Sismondi
says: crises are possible, because the manufacturer does not know the
demand; they are inevitable, because under capitalist production there can
be no balance between production and consumption (i.e., the product cannot
be realised). Engels says: crises are possible, because the manufacturer
does not know the demand; they are inevitable, but certainly not because
the product cannot be realised at all. For it is not true: the product can
be realised. Crises are inevitable because the collective character of
production comes into conflict with the individual character of
appropriation. And yet we find an economist who assures us that Engels
says “almost the same thing”; that Sismondi gives the “very
same explanation of crises”! “I am therefore surprised,”
writes Ephrucy, “that Mr. Tugan-Baranovsky . . . lost sight
of this most important and valuable point in Sismondi’s
doctrine” (p. 168). But Mr. Tugan-Baranovsky did not lose sight of
anything.[4]
On the contrary, he pointed very exactly to the
fundamental contradiction to which the new theory reduces matters (p. 455
et. al.), and explained the significance of Sismondi,
who at an earlier stage indicated the contradiction which reveals itself
in crises, but was unable to give it a correct explanation
(p. 457—Sismondi, before Engels, pointed to the fact that crises
spring from the contemporary organisation of the economy;
p. 491—Sismondi expounded the conditions which make crises possible,
but “not every possibility becomes a fact”). Ephrucy, however,
completely misunderstood this, and after lumping everything together he is
“surprised” that what he gets is confusion!
“True,” says the economist of Russkoye Bogatstvo,
“we do not find Sismondi using the terms which have now received
universal right of citizenship, such as ‘anarchy of
production,’ ‘unplanned production’
(Planlosigkeit ); but the substance behind these terms is noted
by him quite clearly” (p. 168). With what ease the modern
romanticist restores the romanticist of former days! The problem is
reduced to one of a difference in terms! Actually, the problem boils down
to the fact that Ephrucy does not understand the meaning of the terms he
repeats. “Anarchy of production,” “unplanned
production”—what do these expressions tell us? They tell us about
the contradiction between the social character of production and the
individual character of appropriation. And we ask every one who is
familiar with the economic literature we are examining: did Sismondi, or
Rodbertus, recognise this contradiction? Did they deduce crises from this
contradiction? No, they did not, and could not do so, because neither
of them had any understanding of this contradiction. The very idea
that the criticism of capitalism cannot be based on phrases
about universal
prosperity,
[5]
or about the fallacy of “circulation left to
itself,”[6]
but must be based on the character of the
evolution of production relations, was absolutely alien to them.

Wefully understand why our Russian romanticists exert every effort to
obliterate the difference between the two theories of crises mentioned. It
is because fundamentally different attitudes towards capitalism are most
directly and most closely linked with the theories mentioned Indeed, if we
explain crises by the impossibility of realising products, by the
contradiction between production and consumption, we are thereby led to
deny reality, the soundness of the path along which capitalism is
proceeding; we proclaim this path to be a “false one,” and go
out in quest of “different paths.” In deducing crises from
this contradiction we are bound to think that the further it develops
the more difficult will be the way out of the contradiction. And
we have seen how Sismondi, with the utmost naïveté, expressed
exactly this opinion when he said that if capital accumulated slowly it
was tolerable; but if it accumulated rapidly, it would become
unbearable.—On the other hand, if we explain crises by the
contradiction between the social character of production and the
individual character of appropriation, we thereby recognise that the
capitalist road is real and progressive and reject the search for
“different paths” as nonsensical romanticism. We thereby
recognise that the further this contradiction develops the easier
will be the way out of it, and that it is the development of this system
which provides the way out.

Itis quite natural that our romanticists should seek
theoretical confirmation of their views. It is quite natural that their
search should lead them to the old rubbish which Western Europe has
discarded long, long ago. It is quite natural that, feeling this to be so,
they should try to renovate this rubbish, some times by actually
embellishing the romanticists of Western Europe, and at others by
smuggling in romanticism under the flag of inappropriate and garbled
citations. But they are profoundly mistaken if they think that this sort
of smuggling will remain unexposed.

Withthis we bring to a close our exposition of Sismondi’s
basic theoretical doctrine, and of the chief theoretical
conclusions he drew from it; but we must make a slight addition, again
relating to Ephrucy. In his other article about Sismondi (a continuation
of the first), he says: “Still more interesting (than the theory on
revenue from capital) are Sismondi’s views on the different kinds of
revenue” (Russkoye Bogatstvo, No. 8, p. 42). Sismondi, he
says, like Rodbertus, divides the national revenue into two parts:
“one goes to the owners of the land and instruments of production,
the other goes to the representatives of labour” (ibid.).
Then follow passages in which Sismondi speaks of such a division, not only
of the national revenue, but of the aggregate product: “The annual
output, or the result of all the work done by the nation during the year,
also consists of two parts,” and so forth (Nouveaux
Principes, I, 105, quoted in Russkoye Bogatstvo, No. 8, p.
43). “The passages we have quoted,” concludes our economist,
“clearly show that Sismondi fully assimilated (!) the very same
classification of the national revenue which plays such an important role
in the works of the modern economists, namely, the division of the
national revenue into revenue from labour and non-labour
revenue—arbeitsloses Einkommen. Although, generally
speaking, Sismondi’s views on the subject of revenue are not always
clear and definite, we nevertheless discern in them a consciousness of the
difference that exists between private revenue and national revenue”
(p. 43).

Thepassage quoted, say we in answer to this, clearly shows that Ephrucy
has fully assimilated the wisdom of the German textbooks, but in spite of
that (and, perhaps, just because of it), he has completely overlooked the
theoretical
difficulty of the question of national revenue as distinct from individual
revenue. Ephrucy expresses himself very carelessly. We have seen that in
the first part of his article he applied the term “modern
economists” to the theoreticians of one definite school. The reader
would be right in thinking that he is referring to them this time too.
Actually, however, the author has something entirely different in mind. It
is now the German Katheder
Socialists[7] who figure as the modern economists.
The author’s defence of Sismondi consists in closely identifying his
theory with theirs. What is the theory of these “modern”
authorities that Ephrucy quotes? That the national revenue is divided into
two parts.

Butthis is the theory of Adam Smith and not of the “modern
economists”! In dividing revenue into wages, profit and rent (Book I, chap.
VI of The Wealth of Nations; Book II, chap. II), Adam Smith
opposed the two latter to the former precisely as non-labour revenue; he
called them both deductions from the produce of labour (Book I,
chap. VIII) and challenged the opinion that profit is also wages for a
special kind of labour (Book I, chap. VI). Sismondi, Rodbertus and the
“modern” authors of German textbooks simply repeat
Smith’s doctrine. The only difference between them is that Adam
Smith was aware that he was not quite successful in his efforts to
separate the national revenue from the national product; he was aware that
by excluding constant capital (to use the modern term) from the national
product after having included it in the individual product, he was
slipping into a contradiction. The “modern” economists,
however, in repeating Adam Smith’s mistake, have merely clothed his
doctrine in a more pompous phrase (“classification of the national
revenue”) and lost the awareness of the contradiction which brought Adam
Smith to a halt. These methods may be scholarly, but they are not in the
least scientific.

Notes

[1]
The mistaken conception of “accumulation of individual
capital” held by Adam Smith and the economists who came after him is
connected with the theory that the total product in capitalist economy
consists of two parts. It was they who taught that the accumulated part of
profit is spent entirely on wages, whereas actually it is spent on: 1)
constant capital and 2) wages. Sismondi repeated this mistake of the
classical economists as well.
—Lenin

[4]
In The
Development of Capitalism (pp. 16 and 19) (see present edition, Vol.
3, The Development of Capitalism in Russia, chap. I , section
VI.—Ed.) I have already noted Mr. Tugan-Baranovsky’s
inexactitudes and errors which subsequently led him to go right over to the
camp of the bourgeois economists. (Author’s footnote to the 1908
edition.—Ed.)
—Lenin

[6]
Rodbertus.
Incidentally, let us mention that Bernstein, who in general is restoring
the prejudices of bourgeois political economy, has introduced confusion
into this problem too by asserting that Marx’s theory of crises does
not differ very much from the theory of Rodbertus (Die Voraussetzungen,
etc. Stuttg. 1899, S. 67) (E. Bernstein, The Premises of Socialism
and the Tasks of Social-Democracy. Stuttgart, 1899, p.
67.—Ed.), and that Marx contradicts himself by recognising
the ultimate cause of crises to be the limited consumption of the masses.
(Author’s footnote to the 1908 edition.—Ed.)
—Lenin

[7]Katheder-Socialists—representatives of a trend in bourgeois
political economy of the 1870s and 1880s who, under the guise of socialism,
advocated bourgeois-liberal reformism from university chairs.
(Katheder in German). The fear aroused among the exploiting
classes by the spread of Marxism in the working-class movement and the
growth of that movement brought Katheder-Socialism into being; it united
the efforts of bourgeois ideologists to find fresh means of keeping the
working people in subjugation.

Amongthe Katheder-Socialists were A. Wagner, G. Schmoller,
L. Brentano, and V. Sombart who asserted that the bourgeois state is above
classes, can reconcile mutually hostile classes, and can gradually
introduce “socialism” without affecting the interests of the
capitalists but at the same time taking the demands of the working people
as far as possible Into consideration. They suggested the legalisation of
police-regulated wage-labour, and the revival of the medieval guilds. Marx
and Engels exposed Katheder-Socialism, showing how essentially reactionary
it was. Lenin called the Katheder-Socialists the bed bugs of
“police-bourgeois university science” who hated Marx’s
revolutionary teachings. In Russia the views of the Katheder-Socialists.
were advocated by the “legal Marxists.”